PA governor vetoes privatized liquor sales, says it would raise prices and reduce selection

[Paladin]

Interesting. A Democrat governor believes an increase in supply will raise prices. Must be a disciple of Paul Krugman. Or maybe his opposition to privatizing sales arises from some other motive, something more Democrat in nature than economic.

If you live in a state where beer, wine and liquor are sold normally though private vendors, Pennsylvania might look like a foreign country to you. In the Keystone State, if you want a case of beer or some hard stuff, you need to go to a state owned and operated liquor store run under the control of the Pennsylvania Liquor Control Board. (PLCB) The state sets the prices, decides which brands to carry and how much you can buy at any one time. This is a dreadfully inefficient system at best and there’s been a movement going for some time to do away with the PLCB and open up the trade to free market competition. The state legislature recently moved to do just that, but when the measure reached the desk of Democrat Governor Tom Wolf he vetoed it.

Why? Because he said it would lead to “higher prices and less selection” for consumers.”

Regarding House Bill 466: “This legislation falls short of a responsible means to reform our state liquor system and to maximize revenues to benefit our citizen,” Governor Wolf said. “It makes bad business sense for the Commonwealth and consumers to sell off an asset, especially before maximizing its value. During consideration of this legislation, it became abundantly clear that this plan would result in higher prices for consumers. In the most recent case of another state that pursued the outright privatization of liquor sales, consumers saw higher prices and less selection.”

That most recent case the governor mentions is Washington. And they did see prices go up when they privatized, but Wolf fails to mention that it’s because they passed a huge new alcohol tax at the same time. Funny how that works, eh?

About now you might be thinking that increasing competition tends to actually reduce prices and increase selection tailored to what the market demands and the governor is somewhat off his rocker. You would not only be correct, but also you’d be echoing the precise sentiments expressed by Jonathan Adler at the Volokh Conspiracy. But he’s not convinced that Wolf is simply ignorant of basic economics. Instead, there might be some other motivations in play.

There are plenty of other reasons why Governor Wolf might have wanted to veto liquor store privatization. One would be the loss of state jobs to the private sector. Another might the opposition from beer wholesalers who worried about an increase in competition. In other words, signing the bill might have crossed powerful constituencies that benefit from the status quo — even if they benefit at the expense of consumers. It’s also possible that the governor feared that privatizing liquor sales would make alcohol taxes more transparent, thus limiting a potential source of state revenue, or that he feared (as union opponents of privatization argued) that privatization would increase alcohol abuse and alcohol-related accidents — but that argument was premised on privatization making alcohol less expensive and more readily available. Oops.

If Governor Wolf believes the explanation he offered for vetoing the liquor store privatization law, he does not understand basic economics and is immune to empirical evidence. More likely, then, he had other reasons for the veto — reasons he’d rather not share publicly.

http://hotair.com/archives/2015/07/05/pa-governor-vetoes-privatized-liquor-sales-says-it-would-raise-prices-and-reduce-selection/

[mountaineer]

State liquor employees in PA are in a very important (to Dems) union. That is the only reason this idiot Marxist Tom Wolf vetoed the bill.

The PA state stores aren't bad, actually, although I suspect the prices are higher than in states with actual competition. I live in a neighboring state, but when I'm in PA, I shop in one of their "premium" stores because the wine selection is better than in my little town.